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Spousal Tax Returns

ImageIf your spouse doesn't file his/her tax return(s), it could cause you problems both now and in the long term. You have to ask your spouse why they are not filing their taxes, and if you don't get a good answer you need to take steps.

For late filing of tax returns, the CRA may impose penalties and interest on your spouse. This is money that your spouse is choosing to give to the government rather than to you and your children. Any judgments against your spouse will be collected against your jointly owned assets, including your house and savings.

Sometimes the CRA estimates a tax return because a taxpayer fails to file and then your spouse is facing a tax bill. Or the CRA may use their compliance department to find you spouse and request a tax return.

Not filing tax returns is tax evasion, and can result in court imposed fines of up to twice the taxes evaded, plus jail time. In addition, taxpayers still have to pay the taxes owed and all other civil penalties and interest imposed by the CRA. Again, this is further money being lost to the government, to lawyers and courts, which you could have avoided. If your spouse does jail time, then they will lose their job/business and you will lose any income they could generate in that time.

If you are claiming child tax benefits, they will be delayed until your spouse files their return. If your spouse delays more than a few years, you will not be able to backdate your child tax benefits, so you could lose this income.

If you are getting GST rebate and your spouse has not been filing their tax returns, the CRA can decide they want it back. This has happened to at least one client of mine.

Ideally, it should never get this bad. You should communicate with your spouse regarding taxes and filing tax returns. It is actually advantageous to have your tax preparer file joint tax returns.

Why would someone avoid filing tax returns? Here are some possible causes:

It could be because your spouse is too busy, if that is the case a tax preparer and/or a bookkeeper can help take care of things.

It might be that they are overwhelmed and confused about taxes, so they keep on procrastinating. Again, a tax preparer and/or a bookkeeper can help.

It could be because they are trying to hide something, or unwilling to give the government their share - this is a criminal act. In extreme situations, you might need to consult a lawyer, to sever you and your children from your spouses actions and reduce your liability. You might get your spouse to see a tax lawyer who can perhaps negotiate a settlement with the CRA, and protect your spouse from prosecution and penalties.

Finally, time is of the essence. Once you are aware of a problem, you should not procrastinate, but take some action. Once you are back on track, take actions to avoid getting this way again


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